Too-close-for-comfort judge turfed in Actonz tax case

By Deborah Hill Cone

Friday 11th July 2003 1 Comment

A High Court judge has been booted off the $226 million Actonz Inland Revenue test case after it was revealed he had represented the tax scheme's promoter.

Justice John Wild, a son of a former chief justice, Sir Richard Wild, refused to step down from hearing the case "because this is a very small country," but in a last-minute move was bluntly ordered to by the Court of Appeal.

Before being appointed to the bench five years ago Justice Wild acted for software entrepreneur Scott Anderson, the promoter of the Actonz scheme and the central figure in the IRD test case that starts next week in the High Court at Wellington.

The case involves hundreds of millions of dollars of tax deductions claimed by investors who put money into Actonz's software products estimated at $600 million including interest and penalties.

Inland Revenue claims the software was bought by the plaintiffs at an inflated price, which allowed them to claim exaggerated depreciation and GST benefits.

At the heart of the case is the valuation of the software, made at the height of the dotcom frenzy.

The reputations of accountants, lawyers and valuers that backed the scheme will come under scrutiny.

Accountancy giant PricewaterhouseCoopers, tax barristers Nigel Hughes and Lindsay Mackay and valuer firm AUS are among those whose credibility is on the line.

The plaintiffs six representative Actonz investors last month asked for Justice Wild to be disqualified from hearing the case not only as he had acted for Mr Anderson but also because he represented him in a specific deal, known as the Exicom transaction, related to the proceedings.

Acting for the plaintiffs John Eichelbaum repeatedly asked the court for the judge to step aside, finally requesting a hearing which he was told must be before Justice Wild himself. Mr Eichelbaum, himself the son of former chief justice Sir Thomas Eichelbaum, argued there was a risk, or perception of risk, that Justice Wild may be influenced by his connection with Mr Anderson.

But Justice Wild said he had only a "vague recollection" of the client and in a 15-page judgment declined to recuse himself, despite the fact he had earlier disqualified himself from hearing a separate case involving Mr Anderson, a former Dairy Board executive.

Justice Wild said the test for apparent bias must be applied "bearing in mind the reality of the New Zealand situation."

"This is still a very small country. New Zealand judges frequently have some knowledge of or connection with parties appearing before them," Justice Wild said.

He wanted to avoid concerns of "forum shopping." But a three-judge bench of the Court of Appeal disagreed. It ruled a judge other than Justice Wild should be assigned to the proceedings. It has not yet released the reasons.

Actonz's lawyers are defending the valuations of the software in the scheme, calling evidence from US experts including Compaq Computers' marketing director Heide Lemker and an IT expert who will talk about how one product, known as Baccis, is working satisfactorily at Vodafone in Australia.

Comments from our readers

On 1 April 2011 at 9:41 pm Kieth Olbermann said:

Wild fabricated false "facts" in a Court case.I know as I was a Defendant and the lie is in the Court's own documents. He is an embarrassment to Justice,to New Zealand and to his forebears name.